Read more:
• NZ eyes a $2 trillion trade prize
• Record share price makes F&P Healthcare $3b company
"I don't think we've seen a sequence of profit upgrades from any New Zealand company in the last 10 years of this nature," said Andrew Bascand, managing director of Harbour Asset Management, which holds the shares among its $1.2 billion of equities.
"It's our largest position in our portfolios, right across all our portfolios, so I can't say anything more than that, can I? We really like this company."
F&P Healthcare yesterday upgraded its full-year profit guidance for the 12 months to March 31 to between $105 million and $110 million, up from the $100 million forecast it provided at its annual meeting in August.
It also reported a 10 per cent rise in half-year profit to a record $48.9 million.
The firm's gross profit margin rose to 60.6 per cent from 58.4 per cent in the same period last year as a result of factors including a favourable product mix and expanding Mexican production.
Twenty-seven per cent of the company's consumable products are now made in Mexico.,
"To get a 2 percentage point improvement in margin is quite phenomenal," Bascand said.
Operating revenue in the half-year rose to $317.4 million from $303.9 million a year earlier.
Research and development spending went up 21 per cent to $31.3 million - almost 10 per cent of the firm's operating revenue.
See the latest F& P Healthcare results announcement here:
The head of equities at Nikko Asset Management New Zealand, Stuart Williams, said it was especially positive that around 80 per cent of the company's revenue was now recurring, derived from consumable products such as face masks and tubes.
"I think they've got really good momentum, and one of the aspects that points towards quite a sustained, ongoing improvement is the fact that they're expanding their manufacturing capability in Mexico," Williams said.
F&P Healthcare chief executive Mike Daniell said yesterday's result was particularly positive because earlier guidance provided by the company forecast a muted 2015 financial year as a result of currency hedging coming off.
"It's a very pleasing result and in particular given the headwind we've had with the weak US dollar and weak euro for so long, it's great to be able to be well ahead of that," Daniell said.
Profit margin expansion had reduced the effects of the lower hedging gains, he said.
"The reason why it hasn't affected us much, and I guess we hope it won't ultimately, is because our gross margins are expanding at a faster rate than we first indicated at the beginning of this financial year," he said.
"Because we've put new hedging in place much closer to current spots, we're reasonably insulated for the rest of the year if the New Zealand dollar jumps up again, so we have a high degree of certainty for the rest of this year now in terms of effective exchange rate."
When the company gave its previous profit guidance, in August, the exchange rate was around US84c.
It has since dropped significantly, and the dollar was trading at around US79c last night.
F&P Healthcare yesterday declared an interim dividend of 5.8c a share, up from 5.4c in the same period last year.
Q&A
What is the history of the company?
Fisher & Paykel Healthcare branched off from Fisher & Paykel Appliances in 2001, with Mike Daniell as chief executive.
What does Fisher & Paykel Healthcare do?
The company produces medical devices for conditions such as sleep apnoea, as well as humidifying and ventilation equipment for use in hospitals. Its latest technology is humidification for laproscopic surgeries, reducing infection and complication rates.
How have its shares performed recently?
They have more than tripled in value to close at a record $5.76 last night, valuing the company at $3.2 billion.
- additional reporting BusinessDesk
